PremiumStocks fell again on Monday and the dollar rocketed to a new two-decade high as worries about higher interest rates and a tightened lockdown in Shanghai deepened investors' fears that the global economy is headed for a slowdown.
India's benchmark indices extended losses from the previous week and ended lower for the fourth straight day on Monday, largely led by losses in index heavyweight Reliance Industries which fell over 4%. Banks, metals and oil and gas stocks fell the most.
Declines in stocks in Asia and Europe, due to concerns about global growth following lockdowns in China and aggressive policy tightening from central banks, also kept Indian markets under pressure.
Rising oil prices and a strengthening US dollar have weighed heavy on the rupee with a surprise rate hike by the Reserve Bank of India (RBI) last week doing little to stem capital outflows.
The rupee fell past its previous record low of 76.98 against the US dollar in March to 77.56 on Monday. It slumped 57 paise to close at all-time low of 77.47.
The benchmark Sensex was down 364.91 points at 54470.67, and the Nifty fell 109.40 points to 16301.90. About 1,036 shares advanced, 2,353 declined, and 140 were unchanged.
Midcap and smallcap indices fell 2% each.
India’s liquefied natural gas importers are purchasing extra volumes from Russia at a discount as most other spot buyers shun the fuel.
Companies including Gujarat State Petroleum Corp. and GAIL India Ltd. recently bought several LNG spot shipments from Russia at prices below prevailing market rates, according to traders with knowledge of the matter. They may purchase more as long as the Russian fuel remains cheaper than rival suppliers.
Domestic steel prices are showing signs of fatigue after a relentless rally over the past two years following supply disruptions, decarbonization measures globally, especially in China and geopolitical risks stemming from the Russia- Ukraine war, which has driven up raw material costs, ratings agency Crisil said on Monday.
Federal Bank has been taking a cautious approach in building the loan mix toward high-rated corporates and retail loans. The bank’s liability franchise remains strong with CASA plus Retail TD of ~92% and the bank looking to improve its CASA deposits gradually over the medium term. FB has managed asset quality well despite the pandemic and the restructured pool behaving well with collections remaining healthy is reassuring. Key positives are a) Improving business mix, b) Adequate CRAR, c) Strong Liability franchise and d) Incremental lending to better-rated borrowers. Focus on high-margin businesses such as the MFI, CV portfolio, and Credit Cards will gradually aid in margin improvement.
We maintain a BUY recommendation with a Target Price of ₹115 (1.1x FY24E ABV), implying an upside of 27% from CMP.
The dollar climbed to its highest levels in two decades on Monday as a combination of rising U.S. Treasury yields and a tightening lockdown in China boosted the safe haven appeal of the greenback.
Against a basket of major currencies, the dollar topped 104.19 for the first time since July 2002, extending its almost 9% rise this year.
The country's retail sector saw a pickup in hiring, reporting double-digit growth in April for the first since the outbreak of the pandemic, according to the monthly Monster Employment Index (MEI) released Monday.
Bank Nifty started last week with a downward gap and selling pressure throughout the week led the index to end on a weak note. Bank Nifty closed at 34591 with a loss of 1497 points on a weekly basis
• On the weekly chart the index has formed a long bearish candle forming lower High-Low compared to previous week and has closed below its low indicating weakness at current levels
• The chart pattern suggests that if Bank Nifty crosses and sustains above 35200 level it would witness buying which would lead the index towards 35600- 36000 levels.
• However if index breaks below 34000 level it would witness selling which would take the index towards 33000- 32500.
• Bank Nifty is trading below 20, 50, 100 and 200 day SMA which are important short term moving averages, indicating negative bias in the short to medium term
• For this week, we expect Bank Nifty to trade in the range of 35200-32500 with a negative bias.
Outlook & Valuation: Based on annualized FY22 numbers, the IPO is priced at EV/Sales of 5.1x and Price to Book value of 5.2x at the upper price band of the IPO. For 9MFY22 the company has reported an EBITDA loss of ₹232 crores and a Net loss of ₹891 crores. In the Indian markets, no other peer group has the same business model as Delhivery. The company has reported good revenue growth of 82% in 9MFY2022 and it is expected that the company may turn EBITDA positive by the FY2022 end. Given the expensive valuation, we are assigning a NEUTRAL recommendation to the Delhivery IPO.
IDFC Mutual Fund has discontinued the SMS Transact facility for subscription or redemption of units of its schemes with effect from 27 April.
The SMS Transact, until recently, facilitated additional purchases, redemption and SIP registration in eligible open-ended schemes of IDFC MF through a single message from a registered mobile number.
Bitcoin is falling toward levels last seen in July 2021, part of a wider retreat in cryptocurrencies amid a global flight from riskier investments.
The world’s largest digital token dropped as much as 2.7% on Monday and was trading at $33,568. The second biggest, Ether, shed as much 4.6%. Most of the major virtual coins were under pressure over the weekend and the downbeat mood carried over into Monday. Equities in and Europe also dropped, with Hong Kong’s benchmark index slumping 3.8%.
Russian President Vladimir Putin evoked the memory of Soviet heroism in World War Two on Monday to urge his army towards victory in Ukraine.
Addressing massed ranks of servicemen on Red Square on the 77th anniversary of victory over Nazi Germany, Putin condemned what he called external threats to weaken and split Russia, and repeated familiar arguments he had used to justify its invasion - that NATO was creating threats right next to its borders.
Europe's stock markets wavered in opening deals on Monday, as investors paused from recent heavy losses but remained anxious over surging inflation and rising interest rates.
London's benchmark FTSE 100 index was almost unchanged at 7,388.93 points, compared with Friday's closing level.
In the eurozone, Frankfurt's DAX rose 0.1% to 13,692.51 points, while the Paris CAC 40 fell 0.1% to 6,251.47.
UPL Q4 revenue rises 24% year-on-year to ₹15,861 crore.
Net profit grew 27.5% to ₹1735 crore from ₹1361 crore.
Adani Airport Holdings Ltd (AAHL), a wholly-owned subsidiary of Adani Enterprises, on Monday said it has raised $250 million through a 3-year ECB facility from a consortium of Standard Chartered Bank (SCB) and Barclays Bank PLC.
The facility has an option to raise an additional $200 million.
The freshly raised capital will be used for capital expenditure and development of six airports, the company said in a release.
For the third quarter in a row, telecom services provider Reliance Jio saw a decline in its net subscribers. In Q4FY22, its net subscribers fell 10.8 million sequentially, to 410.2 million. In a post earnings call, the company's management attributed this loss to SIM consolidation after it raised tariff in its prepaid segment. SIM consolidation refers a decline in the number of mobile SIM cards in the market, which usually happens after telecom companies raise prices.
Note that close competitor Bharti Airtel Ltd has seen healthy growth in net subscriber additions in the months of January and February, showed offical data.(Read here)
Recommendation: We recommend a BUY rating on the stock with a target price of ₹1415/share, implying an upside of 10% from the CMP.
Foreign institutional investors have on the whole steered clear of India’s biggest share sale, deeming it too expensive given currency risks and the global market backdrop.
With just hours to go until the end of the subscription period for the $2.7 billion initial public offering of Life Insurance Corporation of India, foreign institutional funds have put in orders for merely 2% of the shares set aside for all institutional buyers.
While the anchor portion of the IPO drew in sovereign funds from Norway and Singapore, most of the shares went to domestic mutual funds.
Elara Capital:
Valuation: upgrade to Accumulate with unchanged TP of ₹258
Management has plans: 1) to scale up RE capacity to 15.0GW by FY25 from the current 2.6GW, 2) increased focus on the power distribution business, and 3) seize opportunity in the solar EPC business. The RE deal works out to be at INR106 per share based on FY23E RE assets EBITDA as assumed by management. We value Tata Power RE asset at INR 144 per share on FY24E based on our SOTP valuation while other non-RE businesses are at INR 114. We upgrade our rating to Accumulate from Reduce due to 18% fall in the stock price since April 22 and maintain our TP of INR 258.
We believe LTI and Mindtree merger is structurally positive and can unlock several synergies as 1) enhanced scale can help attract large deals, 2) complementary vertical strengths will result in strong and diverse portfolio, 3) minimal client overlap and broadened set of horizontal capabilities can provide cross-sell opportunities and reduce client concentration risks, 4) combined experience and expertise across partner ecosystem can enable to upgrade alliance with partners, 5) cost synergies can help in rationalizing SG&A costs and 6) access to wider and more diverse talent can help achieve better pyramid rationalization and utilization.
In the near term, there may be risk of higher attrition especially at senior management level. However, management mentioned that merger will provide new opportunities which will require additional leadership bandwidth. In interim period, until closure of the transaction, top priority for both companies will be delivering industry leading growth and maintaining margins in-line with their guidance for FY23. Our EPS estimates for LTI and Mindtree remain unchanged for FY23. We have assumed 100bps increase in margins due to cost synergies in FY24, resulting in FY24EPS of Rs. 194 for the combined entity. We maintain buy on both LTI and Mindtree.
On the weekly chart the index has formed a long bearish candle forming lower High-Low compared to previous week indicating weakness at current levels.
• The chart pattern suggests that if Nifty crosses and sustains above 16600 level it would witness buying which would lead the index towards 16800- 17100 levels.
• However if the index breaks below 16300 level it would witness selling which would take the index towards 16000-15700.
• For the week, we expect Nifty to trade in the range of 16600-15700 with a negative bias
• The daily and weekly strength indicator RSI is moving downwards and is quoting below its reference line indicating negative bias.
Adani Group has taken the lead in the race to buy Switzerland-based Holcim’s India arms—Ambuja Cements Ltd and ACC Ltd—with a war chest of $13.5 billion for the deal, two people with direct knowledge of the matter said.
Prime Minister Fumio Kishida said Japan will slowly phase out Russian oil imports in unity with the Group of Seven's effort against Russia's invasion of Ukraine.
Leaders from the G-7 countries met online Sunday and announced their commitment to ban or phase out Russian oil imports in their latest effort to pressure Moscow into ending its aggression on Ukraine.
“It's an extremely difficult decision for a country that mostly relies on energy imports, including oil," Kishida told reporters Monday. “But G-7 unity is most important right now."
Healthy refining and Jio drives Q4 profits; Retail posts resilient performance.
Strong GRMs, higher gas prices to drive Q1 results, while Jio and Retail to continue with their dominant performance.
We cut FY23/24E earnings by 9%/7% to factor in higher than expected FY22 debt. Q4 benefitted from strong refining performance offset by weak downstream chemical margin (higher input prices) and E&P segment (lower volumes). Retail segment saw sharp improvement with 98% stores operational (Q3 97%), while Jio displayed steady performance despite sim consolidation among inactive customers.
RIL’s vertical growth remains impressive given 1) recovery in GRMs due to gas to oil switch (Singapore GRMs at over USD18/bbl vs USD8 in Q4) 2) higher gas realization in H1 at USD9.9/mmbtu (H2 USD6.6) and 3) improving retail profitability trend as pandemic concerns ease. With sim consolidation behind, we expect strong subscriber addition given shift from 2G to 4G. All round recovery in global economic activity augurs well for all RIL’s business segments and we believe the company is well positioned to incubate new business and pursue inorganic opportunities with its liquid BS.
Maintain ‘BUY’ with a PT of Rs3,000 (Rs3,045) earlier.2 JPL EBIDTA/PAT was at Rs376bn (+22%Y/Y) and Rs148bn (+23%Y/Y).
According to IQVIA sales data for the 12 month period ended March 2022, Enstilar Foam, 0.005%|0.064% achieved annual sales of approximately $115.2 million.
Increasing Focus on EV and Exports
· TVS Motor Ltd (TVSL) posted tepid results in Q4FY22 with the performance slightly below our expectations due to semiconductor shortages and input cost pressures, while annual performance stood strong due to continuous improvement in operational performance. TVSL’s revenue for the quarter stood at ₹5,530 Cr (our estimate - ₹5,626 Cr) as compared to ₹5,322 Cr in Q4FY21, reporting a growth of 4% YoY. This was on account of ~8% decline in volumes, which was more than offset by 12.5% YoY increase in ASPs. Reported EBITDA came in at ₹557 Cr, a 4% YoY increase. (our estimate – ₹569 Cr). TVSL reported an EBITDA margins of 10.1%, remaining flat YoY (our estimate – 10.1%), led by significant cost reduction initiatives and price hikes despite various challenges including increase in commodity costs, scarcity of containers for international business as well as shortage in semiconductors.
· We retain our BUY rating on the stock, keeping our target price of ₹720/share unchanged (valuing the company at 22x FY24 EPS)
China's export growth slowed in April, while imports were unchanged as tighter and wider COVID-19 curbs halted factory production, disrupted supply chains and triggered a collapse in domestic demand.
Exports in dollar terms grew 3.9% on year in April, compared with the 14.7% growth reported in March and slightly beating analysts' forecast of 3.2%. The growth was the slowest since June 2020.
Imports were unchanged year-on-year last month, improving slightly from a 0.1% fall in March and a bit better than the 3.0% contraction tipped by a Reuters poll.
Travel and hospitality technology platform OYO on Monday said it has concluded the acquisition of Europe-based company 'Direct Booker' with the transaction valuing the latter at around $5.5 million (over ₹40 crore).
Direct Booker has over 3,200 homes and serviced 20 lakh customers so far, OYO said in a statement.
This acquisition will strengthen OYO's presence in Europe broadly and Croatia specifically where it already has nearly 1,800 vacation homes on its Belvilla platform and over 7,000 homes on its Traum Ferienwohnungen platform.
Reliance Industries became the first Indian company to cross $100 billion in annual revenues after the oil-to-telecom giant reported strong March quarter results across its energy, telecoms and retail businesses.
The conglomerate, which is owned by Asia's richest man Mukesh Ambani, reported a net profit of 162.03 billion rupees ($2.1 billion) between January and March, 22.5% higher on year.
Revenues from operations rose 36.8% year-on-year to 2.12 trillion rupees, aided by both its legacy energy business and newer ventures such as retail.
Income in the quarter helped gross revenue cross 7.93 trillion rupees for the financial year ended 31 March.
The Indian rupee fell to a record low as dollar strength dented demand for riskier assets and foreigners continued to dump the nation’s stocks.
The rupee dropped as much as 0.3% to 77.1825 a dollar on Monday, slipping past the previous record low 76.9812 touched in March.
Foreign funds have pulled out $17.7 billion from Indian equities this year, the highest on record, as the prospect of aggressive tightening by global central banks roiled markets. The currency has also been buffeted by other headwinds including a widening current account deficit, and a surge in global crude prices. Even the Reserve Bank of India’s out-of cycle rate increase last week hasn’t been able to stem the rupee’s decline.
Gold dropped on Monday as an elevated dollar pressured demand for greenback-priced bullion, with rising U.S. Treasury yields further weighing on prices.
Spot gold was down 0.4% at $1,874.89 per ounce, while U.S. gold futures also slipped 0.4% to $1,874.80.
The dollar firmed near recent 20-year highs against its rivals, making greenback-priced bullion less attractive for other currency holders.
Shares of Campus Activewear will list on the exchanges on 9 May.
The company raised ₹1,400 crore through its IPO that was subscribed 51.75 times during 26-28 April.
If we take a glance at the daily time frame chart, we can see the ‘Pennant’ pattern target in the vicinity of 16200 – 16000, which is not far away from the current level. Hence, we would rather wait for some reversal in the coming week. On the higher side, 16500 followed by 16700 are the immediate levels to watch out for.
Shares of Reliance Industries, HCL Tech, LTI, Mindtree, Tata Power, among others, will be in focus today.
UPL, PVR, Godrej Agrovet, Infibeam Avenues, Dalmia Bharat, 3i Infotech, Aarti Drugs, BASF India, Borosil, Central Bank of India, CMS Info Systems, Craftsman Automation, Vedant Fashions, Suven Pharmaceuticals are among the key companies scheduled to release their quarterly earnings on 9 May.
With most of their loans linked to an external benchmark, small businesses will feel the bite of rising borrowing costs almost immediately as the Reserve Bank of India’s (RBI’s) surprise 40-basis points rate hike ripples through the banking system, experts said.
Oil prices slipped on Monday, along with stock markets in Asia, sparked by fears that a global recession could dampen oil demand, with investors eying European Union talks on a Russian oil embargo that is expected to tighten global supplies.
Brent crude dropped 28 cents, or 0.3%, to $112.11 a barrel. U.S. West Texas Intermediate crude was at $109.36 a barrel, down 41 cents, or 0.4%.
Global financial markets are also spooked by concerns over interest rate hikes and extended COVID-19 lockdowns in China that are hurting the world's second largest economy.
Nifty futures on the Singapore Exchange fell 199 points, or 1.2%, to 16,221.50 in early deals on Monday, hinting at a negative start for Indian benchmarks.
On Friday, the Sensex slumped 866.65 points, or 1.56%, to end at 54,835.58 while the broader Nifty 50 fell 271.40 points to 16,411.25.
U.S. equity futures and stocks fell anew Monday and the dollar climbed as high inflation, monetary tightening and the prospect of an economic slowdown spurred another bout of risk aversion.
S&P 500 and Nasdaq 100 contracts shed over 1%, Japan led an Asian stock gauge lower and sovereign debt was under pressure -- providing little respite after the fifth straight weekly decline in global shares and bonds.
Oil hovered around $109 per barrel. Crude is being buffeted by the demand hit from China’s outbreak and supply risks linked to Russia’s war in Ukraine.
S&P 500 futures fell 1.2%, the Nasdaq 100 futures slid 1.1%, and Euro Stoxx 50 futures shed 1.5%.
Japan’s Topix index lost 1.4%, Australia’s S&P/ASX 200 index shed 1.6%, South Korea’s Kospi index fell 0.8%, and China’s Shanghai Composite Index rose 0.2%.
On Friday, the S&P 500 had dropped 23.53 points to 4,123.34. The Dow Jones Industrial Average fell 98.60 points, or 0.3%, to 32,899.37, and the Nasdaq lost 173.03 points, or 1.4%, to 12,144.66. The Russell 2000 index of smaller companies tumbled 31.58 points, or 1.7%, to 1,839.56.
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